You just purchased a pin inserting machine to relieve some bottleneck problems that have been created in manufacturing a PC board. The machine cost $56,000 and has an estimated service life of 5 years. At that time, the estimated salvage value would be $5,000. The machine is expected to operate 2,500 hours per year. The expected annual operating and maintenance cost would be $6,000. If your ﬁrm’s interest rate is 15%, what would be the machine cost per hour?

Mr. Dubey • 52.49K Points
Coach

Q. You just purchased a pin inserting machine to relieve some bottleneck problems that have been created in manufacturing a PC board. The machine cost $56,000 and has an estimated service life of 5 years. At that time, the estimated salvage value would be $5,000. The machine is expected to operate 2,500 hours per year. The expected annual operating and maintenance cost would be $6,000. If your ﬁrm’s interest rate is 15%, what would be the machine cost per hour?

(A) 8.79

(B) 7.85

(D) 5.89